On your federal tax return you can claim an itemized deduction for property tax that you actually paid. Property tax that you didn't pay, for any reason, does not have to be reported. You do not have to report the fact that you are exempt from the property tax. Your deduction for property tax will just be less, or zero.
Note that if you are deducting much less property tax, or no property tax, it might reduce your total itemized deductions enough that they become less than your standard deduction. If that happens you will claim the standard deduction instead of itemized deductions. TurboTax will do that automatically. If you know that that's going to happen, you don't even have to enter the itemized deductions.
If you receive a refund of property tax that you already paid in 2017, just subtract the refund from the total that you paid and report the net amount as your deduction for 2017. If you receive a refund of property tax that you paid in 2016 or an earlier year, you might have to report the refund as income in 2017. If you have that situation, post some details and we will help you with how to report it.
